San Diego startup Mercato — ‘Instacart for indie grocers’ — gets $4M from VCs

San Diego startup Mercato, which makes an app for shoppers to order groceries from small, independent and specialty shops, just raised $4 million from tech investors Monday to grow their business.

The round was led by venture capitalists at Greycroft in New York City, with money chipped in by billionaire tech investor Michael Loeb. The infusion of cash will be used to hire employees to do sales and marketing for Mercato, along with building out the tech company’s analytics platform and other services for grocery retailers.

The startup was founded in 2015 by Bobby Brannigan, a 40-year-old New Yorker who’s had an impressive run as a startup investor and tech entrepreneur. While he’s perhaps better known for founding online textbook retailer ValoreBooks, Brannigan is also a tech investor, backing Uber and Twilio, among several others.

Brannigan just moved his company — and his whole executive team — from the East Coast to San Diego, setting up a new headquarters in Little Italy in October.

As the son of a Brooklyn butcher, Brannigan’s company set out to help small and independently owned shops modernize their tech offerings. The company makes software that allows grocers to import their inventory to an online platform made by Mercato. Here, shoppers can peruse the shop’s virtual shelves, place orders and get groceries delivered to their doors. If the small supermarket doesn’t have a delivery service set up, Mercato handles it for them.

On the business side, the Mercato software also beefs up the tech for small grocers, offering managers things like product and pricing analytics to determine trends and better manage inventory.

On the shopper side, the Mercato platform lets shoppers get the convenience of Amazon Prime Now or Instacart while supporting local and artisan shops. Buyers can also shop several stores at once, including out-of-town specialty shops that can ship their products long distances.

“Mercato has been successful based on two important factors: its technology and its unique ability to serve the needs of independent grocers,” said Ian Sigalow, co-founder of Greycroft. “We believe in the company’s disciplined vision, strong management and vast market potential, and look forward to working with them as the team continues to expand into new markets across the country.”

In a matter of months, the startup has grown to employ 26 people, occupying the ground floor of coworking space Downtown Works. Mercato now has over 750 grocery stores and specialty shops on its platform — 100 more than when the Union-Tribune profiled the company in April — with large concentrations in New York City, Chicago, Boston, Washington D.C., Philadelphia and Los Angeles.

Here in San Diego, the company only has two retailers on its platform: Venissimo Cheese in Del Mar and in Mission Hills, and Windmill Farms. Brannigan said they have “several (local) retailers pending” in the onboarding phase.

Brannigan said he expects to hire 14 people in sales and marketing, and several engineers by the end of this year.